A FEW months ago, six people in their late twenties and early thirties who shared a home in Newcastle's inner-city were provided with a no-grounds eviction notice by owners. The six people had been there since May 2020, when the house had become available for annual lease after the pandemic slammed the door shut on short-term holiday stays.
The owners of the home decided earlier this year that the lifting of pandemic travel restrictions would soon see the return of international and Aussie tourists keen for short-term lettings.
Renting their investment home on a vacation hosting site would once again give the owners a flexibility to block out rental dates and stay in their home when it suited them. The owners had borrowed a significant amount to buy the home and hoped to retire there one day. Negative gearing of the property was helping realise such hope.
This had been a home to six people whose loss can be mainly attributed to the increased income available via holiday letting. Many long-term lease homes that were previously supplying the rental market in Newcastle and surrounds - hello Port Stephens - have been converted into more profitable, whole-of-home, short-stay accommodation.
The squeeze on the long-term rental market because of a landlord preference for short-term holiday rentals is affecting renters in capital cities and country towns around the nation. A recent study from Hobart shows just how severe the impact is.
A Shelter Tas commissioned report - Monitoring the Impact of Short-Term Rentals on Tasmanian Housing Markets - released just over a week ago, found that 47 per cent of short-term rental properties in Hobart had a rental history in the long-term rental market, suggesting that the growth of the short-term rental market has had a direct impact on available properties supplying the longer-lease market.
The report found the withdrawal of 195 properties from the private rental market in Greater Hobart (0.2 per cent of total dwellings) can shift the vacancy rate from two per cent where rent rises will be manageable, to one per cent where rent rises are likely to be upward of 10 per cent.
There appears to be little political will to address the effect an increasing landlord preference for short-term vacation stays has had on Australians who rely on long-term rentals for housing stability.
Those living in the Hunter who have no choice but to survive in the housing rental market know that homes - with stability of tenure and non-stratospheric rents - are as rare as unicorns. But there sure is an increasing abundance of properties available on short-term "sharing" sites.
While the Albanese government has dismissed a holus-bolus scrapping of negative gearing for property investors, it's time for those properties that are entirely let on the short-term market to become exempt from negative gearing. The government's previous attempt - whilst in Opposition - to curtail negative gearing, except for new constructions, appears to have left them so battle-scarred that discussion of any such curtailing is akin to heresy.
Limiting negative gearing to accommodation that will only be let on the long-term market is worth floating with the electorate. The sky won't fall down. Landlords who want to short-term rent a room in their home could still do so, as could those who wished to rent out their main home of residence for a period of time. Homes of residence, by definition, aren't negatively geared. Relax.
PM Albanese has promised $10 billion for social housing. His government says that it will create 30,000 homes. But a UNSW City Futures Research Centre report estimates there is a need for 650,000 affordable or social housing homes in Australia over the next 15 years. The NSW Coalition government has failed miserably at reaching its own social housing targets while fast-tracking a public housing sell-off agenda.
But social housing alone won't meet the demand for affordable housing. The private sector has a role to play, but we have a unique system where Australians "share" their contributions to the taxation system with landlords to lock out long-term tenants both for personal convenience and to maximise profits from short-term lets. All take, no give.
While many landlords pay prescribed tax on income derived from short-term stays, the Australian Financial Review reported in 2019 that "rorts and errors by short-term rental property owners are a "key driver" of a $9 billion income tax shortfall under investigation by the ATO".
It's time to stop landlords from using taxpayer-funded negative gearing to finance purchase of short-term stay properties. "Sharing" ain't always caring.
